Changes in labour laws can raise formal employment to 40%

NEW DELHI: Revamp of labour laws can help in raising participation in the formal sector and increase the share of formal employment from current 11 per cent to nearly 40 per cent besides improving India's ranking in ease of doing business, says a report by staffing services firm TeamLease.

"A revamp of the regulatory ecosystem can improve India's ranking with regard to the ease of doing business and raise the labour force participation in formal sector. Regulatory changes can raise the share of formal employment from the current 11 per cent to nearly 40 per cent", said the report.

According to TeamLease, the current labour regulations not only make things difficult for job creators, it does little in protecting employees.

"Labour law reforms are always equated with tackling the infamous Chapter VB of the Industrial Disputes Act (hire-and-fire). While it needs to be revamped, the larger agenda would be to make compliance transparent, seamless and hassle free," said Sonal Arora, VP TeamLease Services.

Arora further noted, "the critical aspect will be to create a conducive environment that stimulates the growth of enterprises as well as formal jobs".

TeamLease recommended 11 top regulatory changes that are needed in 2017 to accelerate formal job creation including consolidation of 44 central labour laws into four labour codes, Unique Enterprise Number (UEN).

The report noted that employees should be offered a choice in receiving salaries in their preferred mode -- CTC or take home.

The report added that amendments in Contract Labour and Regulation Act 1970, Industrial Disputes Act 1947 and Trade Union Act 1926, among others, would help in creating more formal jobs.

Currently, the Goods and Services Tax (GST) is levied at 12 per cent on payments made for under-construction property or ready-to-move-in flats where completion certificate has not been issued at the time of sale.